U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22054 / July 29, 2011
Accounting and Auditing Enforcement Release No. 3308 / July 29, 2011
Securities and Exchange Commission v. James E. Koenig, 02 C 2180 (N.D. Ill. filed Mar. 26, 2002)
Former CFO of Waste Management Ordered to Pay $2.5 Million
The Securities and Exchange Commission announced today that on July 28, 2011, the United States District Court for the Northern District of Illinois entered an Amended Final Judgment against James E. Koenig, the former Chief Financial Officer of Waste Management Corporation, ordering that he pay $2.5 million in SEC v. James E. Koenig, 02 C 2180 (N.D. Ill. filed Mar. 26, 2002). Koenig was ordered to make an upfront payment of $1.25 million and to pay the remaining $1.25 million in regular installments over the next two years. The Commission’s complaint alleged that beginning in 1992 and continuing into 1997, Koenig and others engaged in a systematic scheme to falsify and misrepresent Waste Management’s financial results with profits being overstated by $1.7 billion. In June 2006, after an 11-week trial, a jury returned a verdict in the Commission’s favor against Koenig on all 60 violations charged, including securities fraud, falsifying company books and records, making false statements in filings with the Commission, lying to auditors, and aiding and abetting the company’s violations. On December 21, 2007, following a two-day bench trial on remedies, the district court entered a Final Judgment against Koenig that permanently barred him from acting as an officer or director of a public company, and enjoined him from violating, or aiding and abetting violations of, Sections 10(b), 13(a), and 13(b)(2)(A) of the Securities Exchange Act of 1934; Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 13b2-2 thereunder; and Section 17(a) of the Securities Act of 1933. The judgment also required Koenig to pay disgorgement, prejudgment interest, and civil penalties. On February 26, 2009, the U.S. Court of Appeals for the Seventh Circuit affirmed all issues of liability and trial procedure, but remanded for further proceedings with respect to the monetary amount of the judgment. On November 23, 2009, the district court on remand reaffirmed its prior Final Judgment, and Koenig appealed. The Amended Final Judgment represents a compromise reached through mediation before the Seventh Circuit’s Settlement Conference Office while the case was on appeal. The permanent officer and director bar and injunction remain unchanged and in full force and effect.
For additional information, see Litigation Release Nos. 20420 (Jan. 3, 2008) and 17435 (Mar. 26, 2002).